6. Income Taxes

3 Months Ended

Mar. 31, 2013

Income Taxes

6. Income Taxes

(6)           Income Taxes

Our effective tax rate for the three months ended March 31, 2013 and 2012 was 37.4% and 348%, respectively, which resulted in an income tax benefit of $237,000 and $153,000, respectively.  The benefit for the three months ended March 31, 2013 and 2012 was primarily due to the statute of limitations expiring for a few uncertain tax positions.

Significant management judgment is required in determining our provision for income taxes and in determining whether deferred tax assets will be realized in full or in part. During the three months ended March 31, 2013, we placed a full valuation allowance on net deferred tax assets.  In assessing the recovery of the deferred tax assets, we considered whether it is more likely than not that some portion or all of our deferred tax assets will not be realized.  The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible.  We considered the scheduled reversals of future deferred tax assets, projected future taxable income, the suspension of the sale of product and services through the seminar sales channel for our StoresOnline segment, the restructuring of the StoresOnline segment, and tax planning strategies in making this assessment.  As a result, we determined it was more likely than not that the deferred tax assets would not be realized; accordingly, we recorded a full valuation allowance. Subsequent to placing a full valuation allowance on our net deferred tax assets, adjustments impacting our tax rate have been and are expected to continue to be insignificant.